All Posts from April 22, 2013

ICL needs to be part of larger bloc, says Israel Corp. CEO

News

Israel Corp. CEO Nir Gilad says the potash industry is undergoing consolidation and companies that are not part of a larger bloc will be at a disadvantage. Israel Corp. is the majority shareholder in Israel Chemicals Ltd. (ICL).

Gilad warned in an interview with the Calcalist economic newspaper that if ICL does not join one of the main blocs, the company will be at a disadvantage. He noted that the interest of Potash Corp. of Saskatchewan Inc. in ICL is due to its low production costs. Gilad said a negative response to PotashCorp will lead the company to look for an alternative to expand its production, and in effect this will mean the value of the resources of the Dead Sea will become worthless. Gilad’s remarks followed last week’s statement by Israeli Finance Minister Yair Lapid that he is opposed to the sale of ICL to PotashCorp. It is still unclear whether PotashCorp plans to go ahead with an offer.

If PotashCorp does eventually make an offer, Israel’s Finance Ministry said that Accountant General Michal Abadi Boiangiu will be the senior official who will oversee a possible deal. Finance Ministry Director General Yael Andoran will not be allowed to handle a sale of ICL for six months because of previous business ties with the Ofer family, which owns Israel Corp. Abadi Boiangiu is known to oppose a deal, and in the past has criticized the low level of royalties paid by ICL.

Meanwhile, investment bank UBS noted that ICL’s share price dropped by 10 percent after Finance Minister Lapid expressed his objections to a takeover and the intention to review government policy on natural resources. UBS said in a research report that Lapid’s position reduces the odds of a deal, but there is a limited scope for a meaningful increase in royalties. According to the UBS report, “a second increase in potash royalties would be politically popular, but hard to justify against international benchmarks.” UBS Analyst Roni Biron estimated that the Israeli government’s take from the Dead Sea potash operations would reach 54 percent of pre-tax earnings by 2018, reflecting the higher end of international potash standards.

In his report, Biron also noted that ICL pointed to a strong start of the year in the potash market, and particularly Europe, which is “back to normal.” He added that ICL is well placed to capitalize on these dynamics given its logistical advantages in Israel, improved economics in Spain, and strong footprint in China and India.

Yara touts 1Q performance

Breaking Industry News

Yara International ASA reports first-quarter net income after non-controlling interests of NOK 2,255 million (NOK 8.04 per share), compared with NOK 3,008 million (NOK 10.54 per share) a year earlier. Excluding net foreign exchange loss and special items, the result was NOK 8.51 per share compared with NOK 8.32 per share in first quarter 2012. First-quarter EBITDA excluding special items was NOK 4,094 million compared with NOK 3,933 million a year earlier.

"Yara reports a strong first quarter with stable margins and sales volumes," said Jørgen Ole Haslestad president and CEO. "Our production increased due to the Qafco expansions, the Lifeco re-start, and a record production performance in Yara’s NPK plants in the first quarter."

Additional ammonia and urea volumes from Qafco, Lifeco, and Yara Pilbara more than offset a 3 percent decline in Yara fertilizer deliveries. Urea sales increased by 4 percent, mainly reflecting higher sales of Qafco urea in North America and Brazil. NPK sales increased 2 percent, with deliveries of Yara-produced compound NPK up 4 percent. Nitrate sales were in line with last year, as increased European deliveries were offset by lower deliveries to markets outside Europe.

Ammonia prices increased by 37 percent, while realized urea prices were 1 percent higher than a year ago. Realized nitrate prices were in line with last year, while NPK compound prices were down 2 percent. NPK blend margins improved as the Brazil market approached normal levels compared with a weak first quarter 2012.

Following a slow start to the 2012/13 season, Western European nitrogen fertilizer industry deliveries increased in the fourth quarter and were stable in the first quarter, leaving season-to-date deliveries 4 percent ahead of last year. Yara’s European deliveries were impacted by poor weather in March, but have recovered so far in April as planting conditions have improved.

K+S increases Legacy cap ex

Breaking Industry News

K+S Group reports that its supervisory board has agreed to increase the capital expenditures budget for the Legacy Potash Project in Saskatchewan to C$4.1 billion from the C$3.25 billion earlier assessed based on the feasibility study conducted in November 2011.

The now presented plan includes investments into K+S’s own infrastructure, modifications of plant components and infrastructure as well as increased material and labor costs. The adjustments to the budget were identified in a very early stage of the project. “The additional findings strengthen the predictability, transparency, and controlling as well as our major project overall,” says Norbert Steiner, K+S chairman.

With the expected commissioning in summer 2016 the company still projects to reach 2 million mt/y production capacity at the new location at the end of 2017. The gradual extension of the annual capacity to 2.86 million mt/y of potash products will occur afterwards. So far the company assumed a production start at the end of 2015. The annual production capacity of the existing K+S sites is up to 7.5 million mt/y of potash and magnesium products.

High water forces closure of Mississippi Locks

News, News Briefs

St. Louis—The U.S. Army Corps of Engineers on April 18 said eight Mississippi River locks between Muscatine, Iowa, and Clarksville, Mo., were expected to close beginning on that date, as recent heavy rains pushed the river above flood stage. The lock closures were expected to take place over a four-day period and could extend into the following week, which will prevent the movement of barges carrying fertilizer and grain in that section of the river. Barge navigation south of St. Louis, Mo., was expected to remain open. River levels at Clarksville were expected to reach 32.5 feet late on April 19, about seven feet above flood stage and the point at which the lock closure would take effect. Levels there were expected to climb to 35.6 feet on April 21, more than 10 feet above flood stage and just 2.1 feet short of the record crest at that location. River levels at Muscatine were forecast to reach 21.9 feet by April 22, nearly six feet above flood stage and 3.7 feet short of the record at that location. The Corps projected lock closures to take place on April 18 at Locks 17, 20, 21, and 22. Closures at Locks 16, 18, and 19 were scheduled for April 19, while Lock 15 was expected to close on April 21.

The Week in Fertilizer Stocks

Fertilizer Stocks

The Week in Fertilizer Stocks

Producer Symbol Price Week Ago Year Ago
Agrium AGU 92.07 94.88 85.03
CF Industries CF 178.06 188.49 186.27
CVR Partners UAN 24.54 24.28 27.29
Intrepid Potash IPI 17.69 18.58 23.06
Mosaic MOS 57.39 60.61 50.56
PotashCorp POT 38.25 39.84 43.26
Rentech Nitrogen RNF 31.45 32.73 25.01
Terra Nitrogen TNH 197.59 200.00 240.65
Distribution/Retail
Andersons Inc. ANDE 51.30 54.11 49.43
Deere & Co. DE 82.57 87.58 80.94
Scotts SMG 43.59 45.92 52.33

Ammonia

Ammonia, Aqua Ammonia, Black Sea, California, Eastern Cornbelt, Market Watch, Middle East, Pacific N.W., Tampa, U.S. Gulf, Western Canada, Western Cornbelt

U.S. Gulf/Tampa: New NOLA barge business was concluded last week at $600/st FOB, in line with the last done business. Sources said this may be an indication that Tampa business for May might just roll over as well.

Natural gas prices continued to move up last week, with the May price settling at $4.401/mmBtu on April 18. However, with $600/st FOB NOLA ammonia and product in the Cornbelts at over $700/st FOB, ammonia producers do not appear too worried.

Eastern Cornbelt: Torrential rains caused rivers to flood throughout northern Illinois on April 17-18, and a powerful storm was expected to bring more heavy rains to the rest of the state late in the week.

Local reports said 24-hour precipitation totals ranged from 4 to nearly 8 inches across northern Illinois at midweek, prompting flash flood warnings for the entire Chicago area. Illinois Gov. Pat Quinn declared a start of emergency for Illinois on Thursday as major flooding was reported on parts of the Des Plaines, Fox, Illinois, and DuPage rivers.

A strong storm system was expected to bring more torrential rains and damaging winds to the rest of the state late on April 18, and parts of Indiana and Kentucky were also facing a risk of severe thunderstorms late on April 18.

All that moisture did little to help growers get a foot in the door on the spring planting season. Several sources said fertilizer movement had “slowed to a crawl” in the region because of the rains, and the planting scheduled was pushed further behind.

As of April 14, only 1 percent of the corn crop in Illinois and Ohio had been planted, while corn growers in Indiana had yet to make a blip on the screen. Those figures trailed last year’s accelerated pace significantly, but also were behind the five-year average for the region.

Sources reported no changes to the spot fertilizer markets last week. Anhydrous ammonia pricing remained in the $780-$800/st FOB range out of regional terminals, with the low in Illinois and the upper numbers in Indiana and Ohio.

Western Cornbelt: Stormy weather once again pounded the Western Cornbelt region in mid-April, further delaying spring planting and causing flooding in parts of Iowa and Missouri.

A powerful storm dropped nearly 8 inches of rain in parts of eastern Iowa and up to four inches of wet snow in the northwestern corner of the state. Flash flood warnings were in effect on April 18 for much of southern and eastern Iowa, and local reports confirmed that several state and federal highways were closed at midweek due to flooding.

The spring storm also resulted in the closure of parts of Interstate 80 in western Nebraska at midweek due to heavy snow and rain, and more moisture was expected overnight on April 18-19.

Missouri was also in the storm’s path, with more than 4 inches of rain reported in north-central areas of the state last week. Hail and damaging winds were also in the mix for Missouri, prompting a midweek tornado watch for 71 counties and a thunderstorm watch for 32 counties. The St. Louis area collected 2-4 inches of rain at midweek, and flood watches and warnings were in effect for most of the state except southeast Missouri on April 17-18.

USDA reported on April 14 that no corn had officially been planted yet in Iowa and Nebraska, while Missouri growers had just 8 percent of the crop in the ground by that date, well behind the five-year average of 17 percent. Last year at this time, Missouri growers had fully 37 percent of the corn crop already planted.

Sources reported no change to spot fertilizer prices, and little new buying activity to test the markets.

The regional ammonia market remained at $720/st FOB in Nebraska, $740/st FOB in western Iowa, and up to $760/st FOB in eastern Iowa and Missouri. Delivered ammonia was in the $760-$770

Urea

Black Sea, California, Eastern Cornbelt, India, Indonesia, Market Watch, Middle East, Pacific N.W., Pakistan, U.S. Gulf, Urea, Western Canada, Western Cornbelt

U.S. Gulf: Bearish numbers continued to be reported last week, with sources reporting that new physical prompt trades for granular were done as low as $350/st FOB. However, some argued that these were not necessarily available to everyone and were one-time deals.

Conceivably, the low-priced barges could be for product still to come in and be loaded. Sources argued that barges that were ready to move up the river began the week at a premium, as high as $380/st FOB. After the drop to $350/st FOB, sources said price ideas were moving their way back up toward the higher number.

Persistent wet weather was keeping inland warehouses full and barges stationary at NOLA. While lots of urea should conceivably be needed for 97.3 million acres of corn, sources said continued wet weather is having its impact. Sunny skies are needed right away to turn the market around, said sources, assuming it is not already too late.

Eastern Cornbelt: Granular urea was quoted in the $435-$445/st FOB range in the Eastern Cornbelt region.

Western Cornbelt: Granular urea was quoted at $435-$445/st FOB in the Western Cornbelt region. Sources quoted the Tulsa, Okla., market in the $420-$425/st FOB range last week, and urea pricing as low as $425/st FOB was also reported in the Twin Cities market in Minnesota.

California: The granular urea market was unchanged at $485-$500/st FOB for truck tons in California, depending on location, with reports of brisk “hand-to-mouth” movement in the state.

Rail-delivered urea was down from last report, however. “Few people want to commit to large rail volumes for future arrival since prices seem to be falling,” said one source. The rail-delivered urea market was quoted at the $500/st level at the upper end, but sources also talked of railed tons that were “definitely cheaper.”

Pacific Northwest: Sources reported softer urea prices in the Pacific Northwest last week. The FOB market was pegged in the $500-$520/st range, depending on location, down $20/st from last report on the low end of the range. Rail-delivered urea was quoted in a broad range at $495-$530/st in the Pacific Northwest, also down significantly from last report.

Western Canada: Sources quoted the granular urea market at $565/mt FOB and $585-$600/mt DEL in Western Canada, while dealer postings remained in the $610-$635/mt DEL range, depending on location.

India: The IPL urea tender that closed April 12 showed softer netbacks to Yuzhnyy and the Arab Gulf than earlier predicted.

At first IPL awarded 500,000 mt, with Iranian sources supplying about 300,000 mt of the take. By the end of the week, however, it looked as if more Iranian tons will be sent to IPL.

Sources report that Oman is in for 100,000 mt, Eurochem through Dreymoor is in for 50,000 mt, 60,000 mt will come from Indonesia, and 50,000 mt from China. The rest of the awards will be coming from Iran.

Unfortunately for the producers from China to the Arab Gulf to Yuzhnyy – and fortunately for India – not enough tons are being taken to stem the slide in pricing.

Working off the lowest offer from Quantum at $379.70/mt CFR, the Yuzhnyy netback comes to about $350/mt FOB, and the Arab Gulf – mostly Iran – netback is $365/mt FOB.

The average price of all the firm offers came to $390.73/mt CFR. This is a substantial savings when compared to the last tender of 2012, when the average in the IPL tender was $414/mt CFR. The low price in December was $404.45/mt CFR. 

All told, companies presented 1.49 million mt as firm offers. Another 860,000 mt were offered as optional tons.

Normally, Indian buyers will counter with specific prices for select p

Nitrogen Solutions

California, Eastern Cornbelt, Market Watch, Pacific N.W., U.S. Gulf, UAN, Western Canada, Western Cornbelt

U.S. Gulf: Sources said UAN, like urea, is starting to back up a bit in NOLA, with price ideas falling as a result. Sources said price ideas are now $325-$330/st ($10.16-$10.31/unit) FOB at best, with lower numbers needed to assure a trade.

Eastern Cornbelt: The UAN-28 market in Ohio remained at $330-$335/st ($11.79-$11.96/unit) FOB Cincinnati and 12.45/unit FOB East Liverpool. UAN-32 was quoted in the $380-$400/st ($11.88-$12.50/unit) FOB range in Illinois and Indiana, depending on location.

Western Cornbelt: UAN-32 was steady at $375-$390.40/st ($11.72-$12.20/unit) FOB most regional terminals at mid-month, with the upper end in Iowa and the low in southern Missouri.

California: Sources quoted the UAN-32 market at $390-$400/st ($12.19-$12.50/unit) FOB terminals in California, with rail-delivered tons pegged in the $415-$420/st ($12.97-$13.13/unit) range in the state. Sources talked of limited inventories. “I believe the local market is not long in product at all,” said one source.

Pacific Northwest: Sources quoted the UAN-32 market at $435-$440/st ($13.59-$13.75/unit) FOB in the Pacific Northwest, with delivered tons in roughly the same range.

Western Canada: UAN-28 remained at $459-$462/mt ($16.39-$16.50/unit) DEL in Manitoba, $462-$465/mt ($16.50-$16.61/unit) DEL in Saskatchewan, and $465-$474/mt ($16.61-$16.93/unit) DEL in Alberta.

UAN production at Yara’s Belle Plaine facility remained offline at mid-month, though company sources said they were hopeful that production would resume April 20-25. UAN production there was originally anticipated to start in mid-March, but was then pushed back to April 5. Production of ammonia and urea was underway at the facility, however.

Ammonium Nitrate

Ammonium Nitrate, California, Market Watch, Pacific N.W., U.S. Gulf, Western Cornbelt

U.S. Gulf: While most remain bullish on ammonium nitrate barges, there were some differences of opinion last week. Trades were reported to have ranged from $338-$347/st FOB, with most putting price ideas toward the upper end of the range.

Western Cornbelt: Ammonium nitrate was unchanged at $400-$405/st FOB in the region.

California: No market was reported for ammonium nitrate in California.

CAN-17 remained at $328-$348/st FOB in California, depending on location and supplier. Effective April 15, Agrium’s CAN-17 posting moved to $340/st FOB Woodland and Helm, Calif., up $5/st from the previous list price.

AN-20 remained at $295/st FOB and $320/st DEL in California. No current prices were reported for ammonium nitrate in California.

Pacific Northwest: CAN-17 was unchanged at $338/st FOB Kennewick, Wash.

No current prices were reported for ammonium nitrate in the Pacific Northwest.

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